Charter 2010 Annual Report Download - page 33

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Upgraded portions of these networks carry two-way video, data
service offerings and provide digital voice services similar to ours.
In the case of Verizon, high-speed data services offer speeds as high
as or higher than ours. In addition, these companies continue to
offer their traditional telephone services, as well as service bundles
that include wireless voice services provided by affiliated companies.
Based on our internal estimates, we believe that AT&T and Verizon
are offering video services in areas serving approximately 24% to
29% and 3%, respectively, of our estimated homes passed as of
December 31, 2010, and we have experienced customer losses in
these areas. AT&T and Verizon have also launched campaigns
to capture more of the MDU market. Additional upgrades and
product launches are expected in markets in which we operate.
With respect to our Internet access services, we face competition,
including intensive marketing efforts and aggressive pricing, from
telephone companies and other providers of DSL. DSL service
competes with our high-speed Internet service and is often offered
at prices lower than our Internet services, although often at speeds
lower than the speeds we offer. In addition, in many of our markets,
these companies have entered into co-marketing arrangements with
DBS providers to offer service bundles combining video services
provided by a DBS provider with DSL and traditional telephone
and wireless services offered by the telephone companies and their
affiliates. ese service bundles offer customers similar pricing and
convenience advantages as our bundles. Continued growth in our
residential telephone business faces risks. e competitive landscape
for residential and commercial telephone services is intense; we face
competition from providers of Internet telephone services, as well
as incumbent telephone companies. Further, we face increasing
competition for residential telephone services as more consumers
in the United States are replacing traditional telephone service with
wireless service.
e existence of more than one cable system operating in the same
territory is referred to as an overbuild. Overbuilds could adversely
affect our growth, financial condition, and results of operations, by
creating or increasing competition. Based on internal estimates and
excluding telephone companies, as of December 31, 2010, we are
aware of traditional overbuild situations impacting approximately
7% to 9% of our estimated homes passed, and potential traditional
overbuild situations in areas servicing approximately an additional
1% of our estimated homes passed. Additional overbuild situations
may occur in other systems.
In order to attract new customers, from time to time we make
promotional offers, including offers of temporarily reduced price
or free service. ese promotional programs result in significant
advertising, programming and operating expenses, and also may
require us to make capital expenditures to acquire and install
customer premise equipment. Customers who subscribe to our
services as a result of these offerings may not remain customers
following the end of the promotional period. A failure to retain
customers could have a material adverse effect on our business.
Mergers, joint ventures, and alliances among franchised, wireless, or
private cable operators, DBS providers, local exchange carriers, and
others, may provide additional benefits to some of our competitors,
either through access to financing, resources, or efficiencies of scale,
or the ability to provide multiple services in direct competition with us.
In addition to the various competitive factors discussed above, our
business is subject to risks relating to increasing competition for the
leisure and entertainment time of consumers. Our business competes
with all other sources of entertainment and information delivery,
including broadcast television, movies, live events, radio broadcasts,
home video products, console games, print media, and the Internet.
Technological advancements, such as video-on-demand, new video
formats, and Internet streaming and downloading, have increased
the number of entertainment and information delivery choices
available to consumers, and intensified the challenges posed by
audience fragmentation. e increasing number of choices available
to audiences could also negatively impact advertisers’ willingness to
purchase advertising from us, as well as the price they are willing
to pay for advertising. If we do not respond appropriately to
further increases in the leisure and entertainment choices available
to consumers, our competitive position could deteriorate, and our
financial results could suffer.
Our services may not allow us to compete effectively. Additionally, as
we expand our offerings to introduce new and enhanced services, we
will be subject to competition from other providers of the services we
offer. Competition may reduce our expected growth of future cash
flows which may contribute to future impairments of our franchises
and goodwill.